Intetics Co v. Adorama Camera

Plaintiff Intetics Co. ("Intetics") provided software-development services to Defendant Adorama, Inc., ("Adorama") for at least four years, beginning in 2006. After the termination of its relationship with Adorama, Intetics filed suit in this court, alleging that Adorama violated the non-solicitation clause of an agreement between the two companies by causing Intetics employees to provide Adorama with services under a contract with a third company, Bestware Services Limited ("Bestware").*fn1 Adorama now moves to dismiss or stay the Complaint. Adorama first claims that this court lacks personal jurisdiction over Adorama and that Illinois is an improper venue for this action. Adorama next argues that the Complaint should be dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Finally, Adorama asks this court to dismiss or stay this action based on abstention principles, because Adorama has filed a parallel declaratory-judgment action against Intetics in New York state court. For the reasons that follow, Adorama's motion to dismiss or stay the Complaint is denied.

I. BACKGROUND

Adorama is a company organized under the laws of New York that sells camera and photography equipment. Its place of business is in New York City, but it has a website accessible in Illinois, and it conducts sales via the internet. Its director is Herman Klein. Intetics is a software-development company incorporated in Illinois and based in Wilmette, Illinois.

Intetics alleges that, on or about June 10, 2006, it entered into a contract with Adorama governing software services to be provided by Intetics's offshore personnel (the "Agreement"). A copy of the Agreement is attached to the Complaint. The initials "H.K." appear on the bottom of each page, but no signature appears on the last page of the Agreement. According to Intetics, the Agreement was faxed from Adorama's offices to Intetics on July 18, 2006. Intetics's president, Boris Kontsevoi, claims in a sworn declaration attached to Intetics's Response Brief that Intetics either misplaced the signature page of the Agreement or never received it. (Kontsevoi Decl. 2, ECF No. 21-Ex. 2.)*fn2 Adorama admits that in early 2006, Intetics discussed providing software-development services to Adorama, that representatives from Intetics visited Adorama in New York, and that the parties "reached an oral understanding regarding the software development services to be provided by Intetics." (Def.'s Mem. Supp. Mot. to Dismiss 2, ECF No. 11.) Adorama denies, however, that a written contract was executed. In a sworn declaration attached to Adorama's Motion to Dismiss, Herman Klein denies signing the Agreement or agreeing to be bound by its terms and denies that anyone from Adorama initialed its pages. (Klein Decl. Oct. 7, 2011 ¶¶ 8-11, ECF 10.)

The Agreement contains a "Non-Solicitation" provision that prohibits the parties from "enter[ing] into employment or other similar relations with any of the employees, contractors, agents, representatives or assigns of one Party without the prior written consent of the other Party" for a period of twelve months following the termination of the Agreement. (Agreement ¶ 7.8.1, ECF No. 1-Ex. A.) It further states that, "[s]hould the Client desire to hire any employee of the Company before the expiration of the [twelve-month period], a hiring fee of fifty thousand U.S. dollars ($50,000 USD) shall be paid by the Client to the Company." (Agreement ¶ 7.8.2.)

The Agreement also includes a "Governing Law and Construction" provision stating, "This Agreement will be governed by and construed in accordance with the laws of Illinois, without regard to the principles of conflicts of law." (Agreement ¶ 7.10.) The provision states that "any action arising out of or in connection with this Agreement shall be brought solely in courts of the State of Illinois or the United States District Court for Cook [C]county" and that each party "consents to the jurisdiction" of those courts. (Id.)

Intetics alleges that it provided software-development services to Adorama until approximately March 21, 2011, when Adorama terminated the Agreement.*fn3 The parties agree that Adorama subsequently contracted with Bestware to provide software development services, and that Adorama and Bestware executed an Offshore Dedicated Team Agreement ("Bestware Contract"). The Bestware Contract, attached to the Complaint, lists the "initial team members" who were to perform services for Adorama. (Bestware Contract, ECF No. 1-Ex. D.)

On July 11, 2011, Intetics sent a letter to Adorama demanding payment of $400,000, or $50,000 for each of eight offshore employees providing services to Adorama under the Bestware Contract, and threatening to bring suit for breach of the Agreement. (Vist Letter, ECF No. 1-Ex. E.) Adorama brought an action on September 9, 2011, in the New York State Supreme Court seeking a declaration that the Agreement was unenforceable and that Adorama was not bound by its terms, or alternatively, that Adorama did not breach the Agreement. Intetics filed this action on September 13, 2011.

II.ANALYSIS

A. Personal Jurisdiction and Venue

Adorama first argues that this court must dismiss Intetics's Complaint because it has no personal jurisdiction over Adorama, as Adorama lacks the requisite "minimum contacts" with Illinois to be haled into an Illinois court, see Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945), and never "purposefully availed" itself of the laws of Illinois, see Burger King Corp. v. Rudzewicz,471 U.S. 462, 474-75 (1985). Adorama argues that it has no corporate presence in Illinois and does not transact business in Illinois, that the services received from Intetics were not performed in Illinois and had no connection to Illinois, that the maintenance of a website is insufficient to establish general personal jurisdiction, and that less than one per cent of Adorama's sales were to customers located in Illinois. (Klein Decl. Oct. 7, 2011 ¶¶ 4-5.)

Adorama's contact with Illinois during its relationship with Intetics may have been limited. But this court need not engage in an analysis of when personal jurisdiction is permitted in Illinois, because "personal jurisdiction is waivable, and [] parties can, through forum selection clauses and the like, easily contract around" the minimum-contacts and purposeful-availment requirements. TruServ Corp. v. Flegles, Inc., 419 F.3d 584, 589 (7th Cir. 2005) (quoting RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997)). A valid forum-selection clause can confer personal jurisdiction. Id. The Agreement states in mandatory language that "any action arising out of or in connection with this Agreement shall be brought solely in courts of the State of Illinois or the United States District Court for Cook [C]county," and that Adorama consents to jurisdiction in the courts of Illinois. The Seventh Circuit has stated that where venue is specified in such mandatory language, a forum-selection clause will be enforced. Muzumdar v. Wellness Int'l Network, Ltd., 438 F.3d 759, 762 (7th Cir. 2006).

Adorama does not argue that the forum-selection clause itself is invalid or unreasonable. Instead, it claims that the provision cannot confer personal jurisdiction because Adorama contests signing the Agreement. It notes, correctly, that Intetics bears the burden to show that this court may exercise personal jurisdiction over ...

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